NSE and BSE curb Paytm daily trading limits to 10% after stock rout

India's stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), have reduced the daily trading limits for shares of the digital payments firm Paytm to 10%, a sharp decrease from the previous cap of 20%.

This decision comes in the wake of a substantial $2 billion loss in Paytm's market value, which has plummeted to $3.7 billion following a regulatory crackdown on the company's banking unit Paytm Payments Bank by the Reserve Bank of India (RBI).

The RBI's stringent measures include directing Paytm's banking wing to halt accepting new deposits and stop new top-ups on its popular wallets starting from March. These actions are a response to concerns over money laundering and non-compliance with Know Your Customer (KYC) regulations. The impact of these restrictions is expected to be profound, as Paytm's operations are heavily reliant on its banking services.

The stock of One97 Communications Ltd, Paytm's parent company, experienced a dramatic 40% drop over two consecutive days. On the BSE, the stock hit its lowest permissible limit of Rs 487.05, resulting in a significant erosion of the company's market capitalization.

Customers of Paytm will be able to use their existing deposits and wallet funds until the end of February. However, unless there is a change in the RBI's stance, wallet top-ups and related transactions will be discontinued after this date. The PPBL, Paytm's banking arm, has been accused of maintaining numerous accounts without proper KYC compliance and allowing multiple accounts to be linked to single PANs, raising suspicions of potential misuse and money laundering activities.

The new 10% daily trading limits will be effective from the following Monday, as announced by both the BSE and NSE on their websites.

With inputs from Reuters

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